County health officials say IG report was ‘simply wrong’ even as commissioners plan hearings on system’s finances

Jun. 28--Cook County health officials continued to reject the conclusions of an inspector general report that questioned their financial practices, while county commissioners raised a furor over the county's enormous public health insurance program.

A report from county Inspector General Patrick Blanchard's office concluded the CountyCare insurance system had more than $700 million in unpaid bills at the end of the 2018 budget cycle, with $500 million owed to outside creditors.

But Dr. Jay Shannon, CEO of the health and hospitals system, said all of the system's unpaid bills from the previous year were settled by February.

"The health system is not sitting on $700 million in unpaid bills," Shannon told reporters on Thursday during a news conference alongside county board President Toni Preckwinkle. "To suggest otherwise is simply wrong."

Instead, health officials said Blanchard improperly conflated estimates of bills the health system thought it might receive with money it actually owed.

County financial disclosures unveiled this week show the health system estimated it owed $500 million to outside providers at the end of 2018. Those bills have since been paid, officials said.

It wasn't clear whether the county's rebuttals would tamp down controversy that had Cook County commissioners making requests for an audit of the health system and plans for public hearing next month to assess both Blanchard's report and the health system's response.

The IG concluded some health providers refused service to participants in the county's Medicaid-backed CountyCare insurance operation because of unpaid bills. The office also said unpaid bills led to a shortage of pacemakers and surgical anesthesia in the system that operates Stroger Hospital and Provident Hospital in Chicago.

Health officials didn't respond to those findings Thursday, saying they'd have a more detailed rebuttal ready in time for July's planned hearing. Blanchard, meanwhile, defended his office's report.

"What I believe is happening is what we're trying to highlight in the report," Blanchard said in an interview Thursday. "We've got 2018 liabilities that have been estimated and or actually accrued. The hospital should actually have 2018 dollars available or in their accounts receivable to pay off the $500 million. They did not."

The inspector general said that pattern offered a "telltale sign" about the health system's finances.

"They're using new money to pay old bills. So they're using money that comes in 2019 that should be used to pay liabilities that are accrued in 2019. Rather, they're using that money to pay old bills," Blanchard said.

The Cook County Health and Hospitals System says it faces a $103 million budget gap this year, which officials blame on a backlog in state Medicaid application processing. Officials said they plan to close the gap with redirected Medicaid revenue and trimming other costs.

"We have adequate funds flow related to the premiums within the health plan to pay the bills related to services that are incurred by our health members," Shannon said, when asked if the health system had a cash flow problem.

But amid questions about whether the county health system should also be operating as an insurer, Shannon said CountyCare needs to stay in place.

"If we intend to stay true to the mission of Cook County Health, then we need the health plan," Shannon said Thursday. "Without the revenue from the health plan, there is no way we could cover those expenses without a significant influx of revenue from local taxpayers."

jjperez@chicagotribune.com

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